Utah Solar – Everything You Need to Know


Information about Solar Panels in Utah

Utah has enjoyed a lot of solar-friendly support over the years but recent program lapses, as well as gaps in some key incentive categories, hold this state back from being a top contender.

While it isn't leading the scoreboards, Utah solar is a solid option with a clear road to profit for anyone interested in taking the plunge.

You'll see by the end of this analysis that Utah has the capacity to put the "industry" back into its solar industry with a few additions to an otherwise solid foundation!


#1 Are Solar Panels Worth it in Utah?

Overall Grade
12 years Avg. Payback Time (For Cash Purchase)
7.8 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$16,515 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

#2 Options for Buying Solar Panels in Utah

In Utah, you have the option of purchasing your solar panels with cash, through a loan, or even via a solar lease.

Cash Upfront

Paying for something with cash is almost always the simplest way to go about things. If you use cash to purchase your solar system, you’ll be able to take advantage of all the perks and incentives offered by the state and federal government without having to worry about interest payments. After the system pays for itself through energy savings, you’ll be able to bring lots of profit to the bank!

Let’s see how long it would take you to pay off your system if you decide to purchase one in Utah.

If you install an average sized 5kW installation, we estimate that you’ll be paying about $18,350 as the sticker price with average prices considered. Right from the beginning, you’ll be able to subtract the 30% federal tax credit of $5,505, which takes the price down to $12,845.

After you’re done with the federal tax break, you’ll then apply the Utah solar rebate of $2,000 – which brings the cost even lower, to around $10,845.

Now that we’ve got the initial cost figured out, we’ll look at a few other variables that affect how much we’ll save over the 25-year lifespan of the average solar system.

First off, nothing is perfect. Your solar panels will actually degrade in performance by about 0.8% each year that they generate power, due to wear and tear.

This isn’t too bad, however, when you consider that your utility is likely to raise their rates by about 3.4% each year. You’ll still be coming out way ahead with these numbers!

After summing it all up, your $10,845 system will take about 12 years to pay for itself, and you’ll make $16,515 in profit over its 25-year lifespan!

Bottom Line: This profit works out to a 7.8% annual internal return on your original investment, which is pretty amazing considering that you will be making money to help save the environment.


While going for a solar lease is often the least attractive option financially, it’s still possible to find a deal that works for you. A lease makes the most sense if you don’t have much money on hand and you don’t have any equity in your home to secure a loan.

Once the lease goes through, a company will install the solar system on your roof and take care of any miscellaneous details of the process. They will also be responsible for any maintenance and damage to the system. Not having to worry about these details definitely has its own value!

You’ll likely enjoy modest savings on your energy bills each year but nowhere near what you could expect if you owned the system outright. The company you are leasing from has to turn a profit too, after all. They will price the lease accordingly so that it is mutually beneficial.

Please remember, however, that there are possible dangers involved with starting a solar lease. Read through the contract carefully and check for ballooning rates (known as an escalator). Consider having a lawyer read the finer print just in case there is something scary hiding there.

Bottom Line: If you don’t have the cash or equity in your home to finance with a purchase or loan, leasing offers a chance to enjoy some moderate savings while contributing to a cleaner environment.

More: Solar Leases


For those of you that don’t have $18,350 stuffed under your mattress, a loan is still a sound choice for investing in solar. You’ll still get all the perks that you would with cash like the tax credits, but you won’t have to come out of pocket with the full amount at once to make it a reality.

Going the loan route should be relatively easy if you have great credit and/or strong equity built up in your home that will allow you to take out a home equity loan (or any of the other loan options). For our purposes, we’ll assume that you qualify for a 15-year loan at a max 5% interest. As with any loan, of course, the lower the percentage the better!

Using the same scenario as the cash example, you’ll end up paying off your system on paper by year 16 and rake in about $11,923 in profit over the 25-year life cycle.

Bottom Line: This profit equates to a 4.4% internal return on your investment, which is still nothing to shake a stick at!

More: Solar Loans

#3 Utah Solar Policy Information

Looking through a state’s solar policies is a great way to discover exactly how the government feels about solar power. Although state governments aren’t directly controlling the utility companies, legislatures and regulatory commissions are still able to influence utilities by setting ambitious renewable energy goals and mandating the utilities to meet them.


In Utah, it appears as though they like the idea of solar but aren’t quite ready to get tough on their local utilities. Let’s check out the details!


Renewable Portfolio Standard

States looking to catapult local renewable energy adoption and decrease emissions typically create a document called a Renewable Portfolio Standard (RPS) outlining their vision for how and when they would like their utilities to start generating energy from those renewable sources.

These standards are great because they create an impetus for utilities to work on renewable energy before they might otherwise consider doing so. Often, utilities will offer rebates or other incentives to residents and businesses for installing solar to help meet RPS goals (with homeowners handing over their RECs, which utilities then use to meet RPS goals).

Unfortunately, Utah has taken a bite out of their standard by branding it a Renewable Portfolio Goal. Although they set an admirable goal of generating 20% of the state’s energy from renewable sources by the year 2025, utilities are only required to do so to the extent that it remains “cost-effective.”

The definition of cost-effective will be determined by the Utah Public Service Commission and the board of any participating electric co-ops. Having a policy that is all talk won’t do much to kick utilities into gear as quickly as some other states.

In an effort to specifically encourage more solar, Utah’s RPS dictates that electricity produced using solar energy will count at 240% of its value for the purposes of meeting the adoption goal. This could be great for solar adopters down the road.

More: Renewable Portfolio Standard (RPS)

Electricity Prices

When considering how valuable solar is in your state, it is important to think about the price of the electricity that you will offset with your solar panels. With solar installed, you’ll actually save more with higher electricity prices. In fact, rising energy costs will actually be a good thing for you if you have a solar system!

In Utah, the average retail price for electricity from the local utility company is $.1074/kWh. This is about 18% lower than the national average of $.1270/kWh, so you won’t be able to save quite as much as you could in other parts of the country.

However, according to EIA data, since 2001 Utah utilities have raised rates an average of 3.4% each year – almost a third faster than the national average! So while prices are comparatively low now, this might not be the case forever. It’s never really a bad time to consider going solar to protect your future!

Net Metering

If you think about when households typically use energy – early in the morning as they get ready for school and work and then in the evening as they get home – you realize that those time periods aren’t exactly a solar installation’s peak production hours, which typically fall around 10AM to 3PM.

Homes that use what’s known as net metering can send the excess energy generated by their systems during peak production back into the grid and then use electricity from their utility during times that the system can’t produce anything (like at night).

The beauty of many net metering systems is that you can actually be compensated for this production in the form of energy credits. With Utah solar, residents with up to 25 kW systems are eligible for net metering, and it’s likely that you’ll end up getting the full retail rate for this electricity (if you pay the utility $0.10/kWh, they’ll credit you $0.10/kWh for your excess electricity).

This is crucial because you want to be getting the same amount of credit for your power as you would be paying the utility. In this way, you are much more likely to be able to cover your costs during the winter months when solar production tends to be lower. Notably, here in Utah, you’ll also retain ownership of any renewable energy credits (RECs) generated by your system!

Note:  We say that you’ll likely be able to get the full retail rate because the largest electric company, Rocky Mountain Power, offers this rate. Electric co-ops offer credits based on their avoided cost (how much they’d pay to produce the same electricity, typically around $0.03 per kWh) and a couple of municipalities have their own separate policies. These are St George and Murray, Utah.

As of 2008, Utah has given permission to smaller electric co-ops that serve fewer than 1,000 people to discontinue net metering service. Always check with your utility to find out how their net metering program works.

More: Net Metering

Interconnection Rules

To avoid having a Wild West situation on their hands, with utilities creating any sort of complicated processes they’d like, states will often write down a set of rules that define exactly how residents can go about connecting their solar system to the power grid. The easier and cheaper this system is, the better.

In Utah, it is fairly easy and straightforward to connect your array to your local utility and they don’t make you jump through many hoops to do so. Provided that your residential system is below 25 kW (this will be almost everyone), you won’t be required to install an external disconnect switch or carry insurance for your system. There is also no lengthy application process that could cause delays in getting you up and running!

Homeowners Associations and Solar Access rights

As with most new technologies, there are often some unintended consequences and obstacles that pop up after people start buying them. In the case of solar power, we all understand that everyone has the right to enjoy the free sunshine coming down on their property but we have to be prepared for instances in which our solar panels are blocked by someone else.

Let’s pretend that you’ve built a shiny new solar array and all is well. The next week, your neighbor decides to build a giant tree house in his backyard which partially blocks your panels for most of the day. You wouldn’t be very happy, would you?

Many states allow homeowners to create easements to address this potential threat. In Utah, their solar easement policy states that anyone can enter into a written contract stipulating that their panels cannot be blocked. These contracts are voluntary, but once signed they will go with the land forever unless specified in the contract.

It’s likely that you’ll never have any trouble with something like this but it is helpful to know where you stand if something does come up!

#4 Utah Solar Incentives, Rebates, and Tax Credits

The most exciting part for most solar purchasers is when they get to the tax credits and other incentives. With Utah solar, you’ll find a little good mixed with a little bad. Overall, you still stand to take some serious money off the price of your solar system!


Federal Tax Credit

When we start the rebates and incentives discussion for going solar, we have to talk about the residential renewable energy tax credit. This tax credit will currently take a whopping 30% off the cost of your solar system by knocking off that amount on this year’s taxes. There’s nothing like a discount on your parts and labor for doing nothing at all!

Although this credit is non-refundable, it can be broken up over several years if you don’t end up owing that much in taxes. This is the single biggest incentive that you’ll find in Utah for going solar, and you should remember that this credit might not be around forever. Starting in the year 2019 it will go from 30% to 26%, and then all the way down to 22% before going away completely. Be sure to act quickly to earn this big credit!

More: Solar Federal Tax Credit

Utah Tax Credits and Rebates

Tax credits at the state level are not something that you can always bank on. Luckily for citizens of Utah, there is a good one here waiting for you! The renewable energy systems personal tax credit will allow you to get 25% of your eligible expenses on a new solar installation back in the form of a state tax credit, up to $2,000.

If you are purchasing a 5 kW system, you will likely hit the maximum before you’re able to cover the full 25% of your costs, but $2,000 is still an incredible discount off of your purchase price!

It should be pointed out that this tax credit is also non-refundable, meaning that while you can reduce your tax bill to $0 with this credit, you cannot get money back. Fortunately, you are able to carry the credit forward for up to four years if you need to. Act fast on this one because the maximum payment actually decreases by $400 each year and will expire on 12/31/2021.

Utility Based Incentives

There used to be some awesome utility-based incentives for Utah solar, but the funding for these has largely dried up. The only utility to currently offer a payment is Rocky Mountain Power, but their program ends at the end of 2017 – and, in even more bad news, it is already closed to new applicants.

Hopefully, Utah will do something to help spur further adoption and these utility companies will jump into action with some new programs!

Property Tax Exemption

As would be expected with any large addition to your home, a new solar panel installation is likely to increase the value of your home by quite a bit. In many states, they choose to reward residents by allowing them to have an exemption on their property taxes for the value of a solar system.

Unfortunately, there is no such property tax exemption in Utah at the moment. Hopefully, this easy addition will be proposed sometime in the near future!

Sales Tax Exemption

Although there is no property tax exemption to speak of, there is a sales tax exemption for solar equipment and labor costs. The bad news is that this exemption only exists for systems that are 2 MW (that’s 2,000 kWs) or larger. This cutoff effectively eliminates residential solar systems from eligibility.

General Increase in Home Value

We mentioned a bit earlier that installing a new solar system on your home could definitely increase its value, but we didn’t mention any specifics. If you take a look at this study from Berkely Lab, you’ll see that researchers looked at the sale prices of almost 22,000 homes with solar and found that there was about a $4 per watt premium for homes with solar owned by the homeowner (sorry, no leases).

If you end up installing the 5 kW system that we looked at in the purchasing section, you are potentially looking at a $20,000 increase in the value of your home. This will be great news if you ever decide to sell your home because it will allow you to recoup the investment with the sale price!

More: Buyers Will Pay More for Solar Homes

If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

#5 Salt Lake City Solarsalt-lake-city

Some forward-thinking cities across the US are a bit more progressive towards solar energy adoption than others, which can change the political landscape of that area. In the case of Utah and Salt Lake City, there aren’t any real differences worth noting.

In Salt Lake City, citizens will be able to take advantage of the fact that their major utility, Rocky Mountain Power, does offer the full retail rate for their net metering service. This is almost a prerequisite for substantial solar savings – homeowners in many other states aren’t as lucky!

What to Do Next?

As you can see, there are a lot of good reasons to go solar in Utah. Between the federal tax credit, state tax credit, and awesome net metering rates, you’ll be able to gain a lot of profit from your investment. If the state legislature decides to put a little more bite in their portfolio standard, residents could stand to reap even better rewards in the future.

Be sure to reach out to a sampling of installers in your area to get estimates specific to your exact location!

Image Credits under CC License via Pixabay - 1, 3, 4 & Flickr - 2

  • by Joshua Bartlett
  • |
  • July 19, 2017
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